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Electronic Filings and New Assessment
Method in D.C.

by Tom Branham, Washington D.C., June 2014


Major changes are occurring in the District of Columbia as the Office of Tax and Revenue (OTR) moves to an electronic property tax filing system. Meanwhile, a new assessment method is being put in place that could raise commercial property values for 2015.


Electronic Filings


Earlier this year, the OTR unveiled a new electronic filing system for Commercial Property Income and Expense Reports and for personal property tax filings. An electronic filing system is now being implemented by the Real Property Tax Appeals Commission (RPTAC) for real property tax appeals.


The RPTAC is taking comments on the procedures involved in electronic appeals until June 21, 2014. To read more about the proposed rule changes and to file a comment electronically, click here.


Values Headed Up Under New Assessment System


Starting with Tax Year 2015, the OTR will switch to a new assessment method for commercial real estate. The change is creating concerns that many properties will be over assessed.


District officials say they made the change following recommendations contained in an outside audit. The goal is to make the assessment process more reflective of the District of Columbia real estate market.


Robert Farr, Director of the Real Property Tax Administration for the OTR told the Washington Business Journal, "Coming up with market values for types of properties, such as Class A buildings in the East End, will lead to more accurate and defensible assessments." Farr added that a market-based approach should also cut down on the time assessors spend analyzing individual properties.


Poor Timing


The change comes at a time when federal agencies and private companies are cutting back on the amount of office space they lease in D.C. Therefore, many property owners are facing steep assessment increases even though their buildings have been sitting fully or partially vacant for an extended period of time.


During this sluggish time for leasing, landlords have been forced to offer free rent, tenant improvement costs and other amenities and concessions. There are concerns that the new assessment method will not be able to take all these issues into account when determining the estimated market value of individual properties.


OTR officials contend the change in the assessment method does account for variables such as vacancies and building improvements. However, it's not necessarily on an individual building level. Rather, it's factored in based on the amount new owners are willing to pay for similar buildings based on their occupancy rates, rent rolls and property conditions.


With the change in assessment methods, the District is projecting its commercial tax base will increase by about $10.1 billion (12.6%) in Tax Year 2015. There's no word on whether the District will use the increased assessments to lower the overall tax rate for commercial properties.